bank rates

Panic Attack: Find Refuge When Rates Fall

When peopel flee from financial institutions, I race to put money in.When there’s reason to panic, some people pull their money out of financial institutions.

Others, like me, put their money into them — specifically, by investing in federally insured certificates of deposit.

When 10-year Treasury yields took a sharp plunge last week (CD rates are linked to Treasury yields), I scrounged up all the excess cash I had and scrambled to find a certificate on which I could lock in a favorable rate — immediately.

My credit unions were no help.

Melrose Credit Union (where I already have two CDs) was paying 2.17% APY on 5-year CDs.

But Melrose is far away, I’d have to apply by mail and the rate wouldn’t be guaranteed before my application and check arrived.

And, when I’m in panic mode, that’s not acceptable.

My “local” credit union — RAFE Federal — is 80 miles distant. It will guarantee a rate over the phone, but it had just dropped the applicable 5-year CD APY from 2.37% to 1.46%.

Not good.

The final blow came from Alliant Credit Union, which had maintained a stable 1.80% APY on 4-year and 5-year CDs since January.

But, again, I couldn’t lock in a rate without mailing in a check (unless, of course, I was willing to drive 145 miles to its Los Angeles branch).

And, wouldn’t you know it, the very next day (the earliest my check would have arrived), Alliant lowered the rate to 1.65% APY.

Only then did it hit me that I’d recently read about a bank having a branch within easy reach (only five miles from my home) at which I could open a 5-year CD offering a 2.00% APY.

That bank was BBVA Compass, whose 5-year rate has featured prominently in recent posts on this site.

Opening the account was a breeze. All I needed was my driver’s license and my checkbook.

The process took about 20 minutes. And the branch representative was friendly and helpful.

Best of all, I locked in my rate then and there.

I’d paid scant attention to BBVA Compass since it swallowed up the failed Guaranty Bank in 2009.

Now, it’s definitely on my list of possibilities for quelling future panic attacks.

And I expect many, what with Europe failing, the economy stalling and Wall Street clamoring for yet more Fed “easing” to prop up stock prices.

But next time, I’ll try to think a bit more clearly, and first look close to home to find a refuge for my money.

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